The Federal Reserve on Monday adopted a rule for the eight largest U.S. banks to hold more equity capital, amid fears on Wall Street that the measure may make it less profitable.
The rule was largely similar to when it was proposed in December, when the U.S. central bank and bank regulator said the firms would face a surcharge of between 1 percent and 4.5 percent of their assets.
The Fed also gave numerical estimates of what the rule would mean for each of the banks. The numbers were in line with an estimate by Goldman Sachs (GS.N) analysts in December.
Regulators want U.S. banks whose failure could threaten markets to fund themselves more with shareholder equity, and less with borrowed funds.
They also want to discourage banks from relying on unstable short-term borrowing, a key contributing factor to the demise of Lehman Brothers at the height of the financial crisis.
“They must either hold substantially more capital, reducing the likelihood that they will fail, or else they must shrink,” Fed Chair Janet Yellen said in a statement.
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